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1 1 (August 20, 2021)

handle is hein.crs/goveeka0001 and id is 1 raw text is: S Congressional SResearch Service Community Resilience: Climate Adaptation and the Community Reinvestment Act (CRA) August 20, 2021 Climate change has become an increasingly salient topic among financial regulators and in the economic development and public policy arenas more generally. In particular, some climate-related disasters and long-term effects are likely to contribute to macroeconomic stress with broad implications for the financial sector and the economy as a whole. For example, extreme heat events could stymie economic productivity and output; natural disasters may induce economic shocks that threaten financial stability; and uncertainty about climate-related events and policies may inhibit certain economic activities. In response to the increased frequency and severity of disasters that the scientific community has linked to climate change, Congress and federal agencies have sought to minimize risk through resilience investments. Resilience activities-also called pre-disaster hazard mitigation, or adaptation activities (see CRS In Focus IF11827, Climate Change: Defining Adaptation and Resilience, with Implications for Policy)-are receiving increased federal and public attention amid the growing perceived threat from climate change to the global economy and society. The federal government uses a variety of tools- including grants, loans, and tax incentives-to promote community and economic development, which includes investments that may address the risks of climate change and promote climate-related community resilience. One tool designed to address credit availability may have the ancillary benefit of promoting climate resilience. The Community Reinvestment Act (CRA) is used to incentivize banks to make certain loans and community investments in low- and moderate-income (LMI) neighborhoods. Given how the CRAis currently implemented, it may result in some amount of those loans and investments going to projects that increase climate resilience. This Insight considers how the CRAcan encourage bank lending to climate- related resilience investments. Background on the Community Reinvestment Act Federal banking regulation may indirectly play a role in addressing climate risks through the CRA The CRA (P.L. 95-128, 12 U. S. C. §§2901-2908) was developed to encourage banks to meet the lending needs of their communities-including LMI neighborhoods-that often receive less market attention and investment than other communities. Three bank regulators implement and enforce the CRA the Federal Congressional Research Service https://crsreports.congress.gov IN11727 CRS INSIGHT Prepared for Membersand Committeesof Congress

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